New Push For Oil Shale Is Continued Failure

On May 1, 1982, nearly 10,000 people worked at Exxon’s Colony Oil Shale project on Colorado’s Western Slope. Twenty-four hours later, Exxon shut the Colony project down. Thousands of people were left jobless and the region’s economy was devastated. This week marks 30 years since the disaster at Colony; what was to become known as Black Sunday.

While Colony is the most dramatic example of the failure of oil shale as a commercial energy source, it’s far from the only one:

  • In 1991, Unocal closed the country’s “most successful” try at an oil shale project in Parachute Creek, Colo. After a decade of trying, the project had swallowed tens of millions of dollars in taxpayer subsidies, and Unocal lost $7 million.
  • In 1981, Chevron and Conoco Shale oil began work on their Clear Creek project, located on a private 25,000-acre site north of De Beque. Construction at the site was halted in 1984.
  • In the 1970s, four companies acquired a federal prototype C-b oil shale lease. The lease was suspended in 1987 and pumping on the production on the lease was stopped in 1991. No oil was ever produced from this lease.

Time has apparently healed oil company wounds for politicians to push this failed resource. There is a new push to drill for this unproven energy source. Spearheading this push is a handful of Congressional heels, Rep. Doug Lamborn (R-Colo.), Rep. Scott Tipton (R-Colo.) and Rep. Mike Coffman (R-Colo.). They recently teamed with Speaker John Boehner to push Lamborn’s PIONEERS Act through the House.

The giveaway is a continuation of a 100-year sink of tax dollars and public lands used to develop oil shale. All have failed. Yet today, industry lobbyists, and the politicians that take money from them are trying to throw more good taxpayer money after bad in an effort to distract from rising gas prices and increase government handouts to oil and gas companies.

Oil shale itself is a misnomer. It is actually rock containing an organic substance called kerogen. The rocks haven’t been in the ground for enough time or under enough pressure to become oil. Oil companies need to recreate geological forces to produce any energy from it. Ideas for developing oil shale have included baking acres of land at 700 degrees for three to four years and even detonating an atomic bomb underground.

The lack of an efficient way to create energy from this rock – which has the energy density of a potato – hasn’t stopped oil companies from using it as a reason to spend money to snatch up public land, or politicians from giving it to them.

If Lamborn, Tipton, and Coffman have their dithers, they would create a host of new giveaways to oil companies such as:

  • Over 2 million acres of public lands for oil shale speculation, even though the oil industry has said, on the record, that it will be at least until 2020 before they know whether commercial oil shale is even possible.
  • “Bargain basement” oil shale royalty rates of 5 percent (compared to a rate of 12.5 percent for onshore oil and gas and 18.75 percent for offshore oil) which would slash revenue to the federal treasury and for local governments, who need the funds to offset the associated costs of energy development such as new roads, utility lines, schools, and fire and police services.

Oil companies themselves have admitted that oil shale is an unready energy source. In fact, Shell Oil, which is recognized as a leader in oil shale research, says the earliest that commercial oil shale technology could be available is next decade, and possibly later: “A commercial decision would be in the middle of the next decade and possibly later depending on the sequence and outcome of research activities.”

Far more valuable to these companies than any potential profit they might receive from extracting a non-cost competitive energy source is the ability to increase their claims to Western lands. Oil companies already have permits to drill on 38.4 million acres of public BLM land, an area larger than the state of Georgia. Of that land, 57 percent remains unused. Congressmen Lamborn, Tipton and Coffman should tell their oil industry benefactors to use the land they have before pushing a bill that would give more of our public land to oil companies for a return that is the equivalent of small potatoes.

 

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